Unipol Assicurazioni S.p.A. (UNI) Earnings Call Transcript
August 8, 2025
Earnings Call Speaker Segments
Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Unipol Group First Half 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Matteo Laterza, CEO of Unipol. Please go ahead, sir.
Good morning to everyone, and thank you for participating to this call. Before opening the floor to the questions, let me make some remarks on the number that we disclosed this morning. They were very solid numbers above all in terms of top line revenues and in terms of improving technical profitability. Starting from P&C, we achieved a premium growth at 4.5%, driven by all the line of business, above all, as usual, health with a growth of 12% and bancassurance above 17%. Also in terms of technical profitability, the improvement was quite consistent with the combined ratio at 92.7%, driven above all by motor. But also non-motor, even if the comparison versus the first half of '24 was negative because of a very tough comparison, we are on target compared to the numbers that we disclosed in the industrial plan. In Life, also very solid premium growth, more than 22% also due to some very important contract that we achieved in the second half of 2025, but also normalizing this number, the growth was above 8% that is a very good number in terms of top line growth. Also in terms of technical profitability, the numbers were very solid with a very high and consistent CSM release in the second half of 2025. Concerning investment, investment in the first quarter was, as you remember, very strong due to a repeatable positive effect of some assets that we mark-to-market through P&L. In the second quarter, in the P&C area, we had, on the contrary, some negative effect, not repeatable as well coming from the same category of assets. But nevertheless, the number overall is above the target that we have in our industrial plan. And so also in terms of contribution coming from investment, we are on track on delivering our target. Finally, in terms of solvency, the number is 222%, driven by organic capital generation that was quite consistent in the first half of 2025 and also in this case, on track compared to the number that we disclosed in our industrial plan. Before opening the floor to the questions, let me say that with me, there is Alberto Zoia that since last month, he is in charge of Investor Relator. He takes the place of Adriano Donati. Adriano was Investor Relator for a very long time. He did a wonderful job in promoting the equity story of Unipol. And if the result in terms of right performance are the one that we have is also due to the effort that he dedicated to this job. I ask Adriano to take another very important role in our organization. I hope that Alberto will be in the position to continue the heritage of Adriano and hopefully to do better in his job. Having said that, I am here with Enrico San Pietro, and I open the floor for the questions. Thank you very much.
[Operator Instructions] Next question is from Tommaso Nieddu, Kepler Cheuvreux.
I have three. The first one, maybe I missed, but would be on the Non-Life net financial results. I was a bit surprised to see those numbers in realized losses in the quarter. So perhaps you can help us on this. My second question is on CSM. In the quarter, you had quite a strong release, but at the same time, a bit of softer new business. So how do you see this evolving over the full year? And then do you expect CSM to grow as new business picks up in H2? And then still on that, is the pace of CSM release in line with your expectations? And then the last one is on the Other segment in Q2. Can you help us understand the strong performance there? Also still in the segment, some color on the breakdown from UNA Hotel, UnipolRec and Healthcare would be great.
Thank you to you. Just to be more precise on the contribution coming from investment in P&C, I talked about the negative effect coming from some assets that are mark-to-market through P&L. In this case, if you remember in the call for the first quarter, I announced a forward sale transaction on BPER share as a consequence of the possible results of the share tender offer. And so on one side -- the BPER share performed very well in the last few months, fortunately. And so on one side, we have the unrealized gains in the stock price that are not mark-to-market on one side. And on the other side, we have the derivative forward sale that is marking a loss. And this loss has been marked at P&L at the 30th of June. And the net effect after tax is more or less EUR 70 million. In the third quarter, when we will disclose the third quarter numbers, you will see the positive effect coming from the tender offer of Banca Popolare di Sondrio, after which we realized a net gain as a consequence of the fact that we exchange each Banca Popolare di Sondrio share with 1.45 shares of BPER and EUR 1 on top of that. And as a consequence of this transaction, we estimate a net positive effect in the consolidated balance sheet in the whereabout of EUR 170 million that you will see in the third quarter of 2025. So in the numbers of investment income, just to sum up, you have embedded in the numbers, the EUR 70 million after tax concerning only the forward sale of the share price and all the positive component of the transaction will be seen in the third quarter 2025. And this is the main explanation of the soft number in the P&C investment income that we achieved in the second quarter of 2025 and overall in the first half of 2025. Concerning the CSM, yes, the CSM release is a little bit above what we produced in the first half of 2025. If you see the representation, the economic variance is quite consistent as a consequence of the fact that financial markets performed overall very well. And it is quite normal that in this context, the effect of the CSM release incorporate part of this positive component in the overall number. But it is -- I consider this a technical effect that depends on the contribution coming -- the economic variance quarter-by-quarter. So I don't think it's material in the consideration of the quality of the CSM that we produce in the same time period. Concerning the Other segment, they performed very well because of the positive performance of some investment and assets that we have in the, what we call, Beyond Insurance, in particular, [indiscernible], and some other assets that we account in the other business. And we have also a positive -- yes, and then we have -- this explained EUR 13 million positive versus EUR 5 million negative in the first half of 2024. And this is the main explanation of the difference.
Next question is from Elena Perini, Intesa Sanpaolo.
I've got three questions. The first one is on the Life business because with EUR 180 million pretax in the first half, it seems that you are doing better than was in your minds, even with the plan. So I don't know if you can update us with the guidance for the second half of the year and on the main drivers? The second question is a follow-up to the previous one on the financial income for the P&C. And in particular, a clarification about the EUR 170 million you mentioned as a positive impact from the offer on Banca Popolare di Sondrio. Is it only a balance sheet item? Or are we going to see something in the P&L, too? And then the third question on BPER. Through the forward sale agreement, you downsized your position again below 20%, but you still have another derivative for potential other, I think, 4% or 4.5% of the capital. Can you elaborate a bit on this?
Thank you, Elena. Concerning the first question, the good result in Life is in part due to the quality of -- an improvement of technical profitability above all concerning the investment product component of our portfolio. And a part is due to the contribution coming from investment in the financial portfolio that is not covered in segregated account [indiscernible] Separate. And this second item is not repeatable in the second half unless also the second half of the year will be as positive as the first half has been. So at the moment, it is not prudent on my point of view to multiply by 2 the net result in Life, but it will depend on above all on financial market performance in the second half of the year. Up to now, the performance of financial market, as you have seen, is quite positive, but we never know what will happen until the end of the year. The second question, again, the EUR 170 million is the positive impact that we will book in the P&L of the company in the third quarter, that represent the positive effect in -- concerning the tender offer of the Banca Popolare di Sondrio shares in exchange of BPER shares and the EUR 1 of the bump that was disclosed by BPER a few weeks ago. And concerning the derivative, of course, the EUR 170 million plus takes in consideration also the mark-to-market of the derivative as it was a couple of days ago. So it is an updated number. Concerning the long position that we have, if I understood well the question, the long position is booked in the Life portfolio. And so it is completely mirrored in the P&L. So you will never see neither the positive contribution nor the negative contribution of the share price because there is the mirroring that can allow us to rebate the positive or the negative to the policyholder, of course, until the coverage of the guarantee that we give to the policyholder. But it will not be a number that we mark-to-market to P&L as we did in the forward sale. And I forgot the third question. There was not a third question. Okay.
Next question is from Michael Huttner, Berenberg.
I had three. One is on what AXA said about the acquisition of PRIMA. They seem to think that this was the real disruptor, I think 10% market share in motor in Italy, really strong margins. AXA was implying in their comments in their presentation last week that effectively the incumbents are losing out here. And obviously, you're so big that, that would probably include you in not directly in that thinking what I mean. But clearly, there's margin and market share going away. So I just wondered how you see that. The second is still on motor, whether you can give us a little bit of an update on the pricing of premiums versus the claims inflation versus frequency, where is the margin moving to? What kind of outlook we have? And the final one is really on the -- still in terms of combined ratio, and I'm really sorry, it's the only number I can think of. So Q1, I remember motor 92%, half year 94.4%. So kind of mathematically, the Q2 is about 96.8%, I guess. I just wondered, is this a normal volatility? Or is there something here that's changing, maybe you're being more prudent on reserving or something?
Thank you to you, Mike. Before leaving the floor to Enrico for the question on motor in general, concerning the PRIMA acquisition, it's quite early to see how and if the market context in motor will change or not. Of course, to me, the positive news is that in this case, PRIMA, that is a manufacturing agency, has been acquired by an insurance company who has prior target the remuneration of the shareholder capital. And so they will pay -- I expect that they will pay attention to the total profitability of the business, not only in the manufacturing agency, but also in the underwriting result. But as I said before, it's quite early to make a forecast or a provision on how the motor business will change, if it will change in the next future. We will see going forward, if there will be some change in the market context in motor. Having said that, I leave the floor to Enrico for all the questions on motor.
So as far as motor third-party liability is concerned, things are evolving well. So basically, the market is still in a market phase in which prices are increasing. The last data from the control authority related to the first quarter of the year report above 4% of the average growth of the average premium. We are in the condition to have a little less increase in premium since we have done our homework before the other competitors. And now we can enjoy a situation in which basically we have the average cost of claim perfectly under control and also a slight improvement in loss frequency. And so basically, everything is fine. There is, of course, as you noticed, a difference between the first quarter and the second quarter result, but it depends on how much we release on prior year reserves. And so basically, the underlying trend remain positive, remains in line with our targets.
Next question is from Gian Luca Ferrari, Mediobanca.
Welcome to Alberto. Three for me, please. On the P&C financial income, but I'm referring here more to coupons and dividends. There is a decline year-on-year at same perimeter. Last year was EUR 176 million. This year is EUR 159 million. Can you explain the decline considering that the investment portfolio went up significantly over the same period? Is the reason because last year, you probably had some very high yield corporate bonds or some inflation-linked or stuff like that. The second question is on what you just said, Matteo, on the financial income of the Life segment that was particularly strong in Q2. You said it is not repeatable. But I was wondering if you can give us more detail on which asset class or investment drove this very strong performance in the Life financial income. And the third and final one is you reported a pretty high above 7%, if I am right, large losses in non-motor. Can you tell us a bit more what are those large losses? I think it's not nat cat, but really large losses. If you can elaborate a bit more what are these components?
Thank you to you, Gian Luca. And as I said during the presentation of the industrial plan, our assumption in 2025, '26 and '27 is that the reinvestment yield is lower compared to the number that we had in the past just because there is -- even if quite smooth, but there is a reduction of interest rate going forward. A part of our investment that are in runoff that are very high-yield investment are related to the fiscal credit that we bought over time after the release of 110% tax credit. This is a portfolio that is in runoff and the contribution of the yield of this asset that is in the whereabout of 6% to 7% is reducing, of course, quarter-by-quarter. And so the contribution is lower, and we cannot invest, as you can imagine, at this yield in the fixed income government area or in the corporate. And so there is a very small decrease. I have to say that it is much lower than what we expected in the context of the industrial plan. You have seen in the number that the current yield is still in the whereabout of 4%, 4.5%. And so it is quite resilient to this trend of reduction of interest rate. Concerning the Life financial portfolio, the contribution come overall from the fixed income portfolio and again, in this case, corporate in particular, and also from the contribution coming from the dividend component of the equity portfolio in the free financial asset portfolio of Life. If financial markets will perform in the same extent in which they have performed in the first half, of course, we can say that it could be repeatable in the second half, but we are still in the middle of August, so it is not prudent to make a forecast on how this performance can be.
Sorry, Matteo, but this is [indiscernible]. So this is in theory running income regardless of equity markets or financial markets.
It's coupon and dividend also. And the dividend component is not...
Yes. So this should be structural. No.
Yes. It depends on the disclose of the dividend that the company will do in the second half.
Of course, of course.
Yes, there is not a very high volatility in this. You have some component of financial assets that are mark-to-market through the P&L. And in this case, you had a positive contribution in the first half of the year. But if financial markets perform bad or very bad, you can have also a negative component.
On the mark-to-market, yes.
And then I guess there was a question on large losses in non-motor. I leave the floor to Enrico.
Yes. Gian Luca, as you have seen, there is, on the overall portfolio, a figure that is not that different. It's a little better in motor and a little worse in non-motor. And in non-motor, it depends on a couple of medium-sized claims that affects around EUR 20 million the overall result, but nothing to be particularly concerned about.
Next question is from August Marcan, UBS.
First one is on P&C. Can you talk about the expense ratio? It seems to have ticked up a bit year-over-year? And second question is just taking a step back from the results. From Unipol's perspective, what do you see as potential operational benefits or synergies from the BPER and Sondrio deal apart from the profits and dividends, of course, you get from the entity?
Okay. I will answer on BPER and Sondrio, and then I will leave the floor to Enrico. There are 2 main source of synergies we can take advantage of. The first one is as shareholders of the combined entity, we will be -- we are 20% shareholder of an entity whose market cap is EUR 17 billion and with an earning power combined above EUR 2 billion. There are a lot of synergies that have been disclosed -- possible synergies that have been disclosed by BPER in its tender offer document. I think that there is a possibility to take advantage of all these synergies, and we will take advantage of it as a shareholder of the new entity at 20%. But we are much more interested to the second kind of synergies as distributor of insurance product to BPER and Banca Popolare di Sondrio. With BPER, we did in the last years a very good job in terms of increasing the productivity of the BPER branches over time. And today, BPER have a productivity that is state-of-the-art in terms of new production in P&C compared to the industry. And I think that by merging the 2 entities, there is a lot of room for improvement in terms of productivity of Banca Popolare di Sondrio branches in terms of distribution of bancassurance product. Through this channel that is also one of the most important driver of profitability of the bank, we can take advantage in order to enhance further what is for us a very strategic distribution channel of our product that is bancassurance. I think that the next few years, the effort of BPER will be on all the items that they disclosed in terms of synergies, but above all in bancassurance. I leave the floor to Enrico for the expense ratio.
As you noticed, our expense ratio has increased. And the main reason is about the commissions to our agents. Our agents compensation scheme is related to technical profitability. So this is for us very, very important. And some of those incentives are related to a 2-year average. So for instance, when we discuss about motor third-party liability, last year, the result was based on the average of 2023 that was very bad. And 2024, that was very good. This year, we expect to have an average that is much better because '24 was good and '25, we hope and so far is good, too. So this means that there are some relevant impacts on our commission, our incentives. And this is the explanation both for motor and also for non-motor.
Can I just follow up on that quickly. So if the technical profitability remains, let's say, as is or gets better, is this expense ratio that you printed a good kind of baseline for going forward?
Yes, I think that is correct since, of course, the most important schemes are related to those 2 years. So if you combine 2 good years, you probably have a good estimation of level of commission related to a good profitability period for us.
Next question is from Alberto Villa, Intermonte SIM.
A couple of questions from my side. The first one is if you can provide us some more granularity on your underwriting stance going forward? You mentioned in the past and you are doing a lot of selection on the property lines. And I was wondering if you are done with that, what you are seeing and what you are, let's say, doing to address your intention to reduce the exposure to some kind of risk, if we can expect that, let's say, review to continue or you completed it? And on the other lines as well, if you can provide some color on what are your expectations also on the health that has been growing double digit, if you expect it to continue this trend also in the future quarters? The second one is on the contribution you are getting in the third quarter from the bid of BPER on Popolare di Sondrio. So the EUR 170 million, is that going to be included in the calculation of the dividend payout for 2025?
Thank you, Alberto. And it will be a positive component of the net result of the company even if it is an extraordinary item. So in terms of contribution to the net profit, of course, it will be part of the net profit. And so consequently also part of the possible that we will use in the payment of the dividend. But we have to consider that it is not an item that is repeatable over time. And so -- of course, it is very supportive, but it is not an ordinary item. Having said that, we are still in August. So talking about the dividend of 2025 is very early up to now. Enrico?
Okay. Basically, on property, we have done the hardest part of the homework, pruning portfolio, reducing our exposures and our concentration. Now we are careful not to fall again in the same situation, but we are growing prudently, as you can see by the figures. We have a 2.3% increase in the first half. And of course, we are going on to look very carefully to the development of this line. On the other side, as you mentioned, we have very good growth and very good profitability coming from health. The market is growing double digit. We are a market leader. We have different channels to rely on. And in particular, we are very confident to be able to continue to grow double digit on agent and bancassurance channel.
Next question is from Andrea Lisi, Equita.
Honestly, most have been answered, but just some clarification. I'm referring to the Slide 22 of the presentation. Just to understand in Non-life, the line above the pretax results, the other revenues and costs that was EUR 17 million in the first half, it was minus EUR 14 million in the first quarter. So just to understand what drove the progression in the development of this line. And the second one, I think that the question was made before, but I did not understand well the answer. If you can provide visibility on -- yes, on the other revenue component of the Other segment that accounted for EUR 42 million in the first half. So the main drivers of that.
Thank you to you, Andrea. And yes, there is a positive contribution coming from the positive result that some assets of the Beyond Insurance area released in the first half of '25. But in 2024, there were also the cost of the merger between Unipol and UnipolSai that, of course, are not repeatable in 2025. So the combined effect of the 2 contribute to the positive contribution to Other revenues in Life.
And regarding the Other segment, if you can repeat...
The Other segment, there are some assets that are in Beyond that are located in non-life like Unipol Rental, for instance, but there are other assets like [indiscernible] and other investment that we have that are allocated in the Others. And so there are 2 components of the so-called Beyond Insurance that are in 2025, finally contributing positively to the P&L. And in the 2024, were giving a negative contribution that are supporting the profitability of the business, both in non-life and in the Other sector. Don't ask me why some assets are in non-life and some in Others because it's an issue that is covered by the guys of accounting. And so it's quite complicated to give you an answer about this.
Just a follow-up. If there is some other business with the exception of UNA where we know there is a strong seasonality, where we can find a seasonality, let's say, stronger in some quarters versus others. So that's amazing that something is not repeatable. Just to understand that.
Yes. No, UNA released a net profit of more than EUR 8 million and more or less is a number that is in the middle concerning the full year results. So there are not so many seasonality between first and second half overall of the Beyond Insurance asset.
Next question is from Michael Huttner, Berenberg.
Just two questions on the numbers. One is the -- you were talking, I think, about the operating capital generation. I'm really sorry, I don't have that metric in my model. I wonder if you can give us -- remind us of the number both in H1 and maybe the guidance you've discussed in the past. I don't have it. And then the second question is following Sondrio and BPER, et cetera, I presume what is the total cash you will get, which will be released out of all this? And obviously, what will you do with it? I mean it's obviously more than the EUR 170 million gain, but I can't figure it.
Thank you to you, Michael. In terms of operating capital generation, as I said, our solvency is at 222%. So there is an increase of 4 percentage points compared to the number in the Q1. Overall, concerning the capital generation, we produced normalized capital generation in the first half in the whereabout of EUR 700 million. But be aware, don't multiply by 2 the number because here, there is seasonality. We had some economic variances of more or less EUR 350 million. And we, of course, net of the capital movements at the end -- the organic capital generation net of capital movements is EUR 350 million area. As you remember, during the presentation of the industrial plan, we disclosed a target of EUR 1 billion in the 3 years net of dividend of capital generation, and we are on track in order to get this number. Concerning the public tender offer, the only cash that we got is the EUR 1 for share that was offered by BPER on top of the 1.45 BPER shares. And so at the end, the cash remittance has been in the whereabout of EUR 90 million.
Next question is from Elena Perini, Intesa Sanpaolo.
Thank you for taking my follow-up questions. They are all about the Slide #10. I would like if you can elaborate a bit on the improvement of the undiscounted attritional loss ratio, which is quite significant in the first half, 2.7 percentage points compared to last year, which are the main drivers of this improvement? Second question is about the discount effect, which was down to 2.4% from 3.8% last year. So if you can give us a guidance for the full year. And the third point is about the unwinding effect, how much was it in the first half and the potential guidance for the full year?
Okay. Elena, I give you the final one, and then I will leave Enrico to elaborate on the attritional. The unwinding in the first half of the year was in the whereabout of EUR 90 million versus EUR 110 million of the discount effect. Having said that, it's quite difficult to make a forecast of the discount rate in the all the year because it will depend on the trend of interest rate in the second half of the year. The reason why it is lower than in the first half of 2024 is because the yield curve went smoothly down in the time frame between the 2 first halves. But of course, I'm not aware on where the interest rate will be at the end of the year. So up to now, there are no main changes compared to this number, but I'm not sure that I can confirm it at the end of the year. Then concerning the attritional, I leave Enrico to elaborate.
Okay. So we have 2 different effects on attritional loss ratio in motor and non-motor. Motor is improving. So motor third-party liability, particularly is improving. The improvement is significant, both because we have back a normal level of reserve release, prior year reserve release. And last year, we had the impact of the Milan Court scheme on bodily injury compensation that reduced a lot this effect. And we also have an improvement in the current year attritional loss ratio in motor since, of course, the increase of premiums that we discussed last year finally arrived to have the full effect on earned premium. And so since the average cost of the claim is under control, loss frequency is slightly declining. And also on the motor other damages results are good. This is the part in which the attritional loss ratio is improving. On the other side, in non-motor, we have a negative effect. Last year, we had a significant positive prior year development coming from our reserve related to the summer 2023 atmospherical events that proved to be more than sufficient. And this is the main reason because when you look at non-motor, there are attritional results that are a little worse. On the overall effect, as you can see, we have good results and still we are confident to be on track on what are the target of our plan that I remember are around 95% of combined ratio in motor and around 90% for non-motor.
[Operator Instructions] Mr. Laterza, gentlemen, there are no more questions registered at this time.
Okay. Thank you very much. Let me say that again, we did a very solid quarter. I listened in the past few days, some of my colleagues, CEOs, making some remarks on their numbers as the best of their history, the most important in their history. We are not in the condition to say this, but just because for us, the best numbers in our history has yet to come. And if you trust in us, as you did in the past, you will see it. Thank you very much, and have a good vacation for all of you who will do it.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
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